The world of e-commerce is constantly evolving, and one of the latest developments that is poised to revolutionize the industry is the Open Network for Digital Commerce (ONDC). This innovative initiative, established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India, aims to create an inclusive ecosystem for open e-commerce. In this article, we will explore the history, structure, and objectives of the Open Network for Digital Commerce and discuss how it is set to transform the way we engage in online commerce.

History

The Open Network for Digital Commerce (ONDC) was incorporated on December 31, 2022, with the initial investment from the Quality Council of India (QCI) and Protean eGov Technologies Limited. Its mission is to develop a set of specifications that facilitate open interchange and connections between shoppers, technology platforms, and retailers. Unlike traditional e-commerce platforms, ONDC is not an application or intermediary but a framework that enables seamless transactions and collaborations in the digital marketplace.

To realize its vision, the Department for Promotion of Industry and Internal Trade (DPIIT) formed a nine-member ONDC Advisory Council in July 2021. The council, in collaboration with the Quality Council of India, adopted open-source methodologies and network protocols to incubate the ONDC. The initiative encompasses various aspects of e-commerce, including inventory management, logistics, and dispute resolution, to cover 25% of domestic digital commerce within two years of its launch.

Pilot Phases

The implementation of the Open Network for Digital Commerce is being carried out in several pilot phases. Let's take a closer look at two key phases that have played a crucial role in shaping its development.

Public beta

The first phase of the ONDC rollout was the public beta, which aimed to test the framework's functionality and gather user feedback. During this phase, small and medium-sized industries volunteered as early adopters, providing valuable insights to refine the specifications and address any issues that arose. The public beta allowed the ONDC team to fine-tune the platform and ensure its readiness for wider adoption.

B2B e-commerce

Building on the success of the public beta, the ONDC expanded its scope to include business-to-business (B2B) e-commerce. This phase focused on enabling seamless transactions between businesses, streamlining procurement processes, and fostering collaboration within the digital ecosystem. By leveraging the ONDC framework, B2B companies can connect with suppliers, manage inventories, and facilitate efficient procurement practices.

ONDC Advisory Council

The ONDC Advisory Council plays a pivotal role in guiding the initiative's strategic direction. Comprising experts from various domains, the council advises the Department for Promotion of Industry and Internal Trade (DPIIT) on policy matters, technical specifications, and industry best practices. The council's diverse perspectives ensure that the ONDC remains inclusive, innovative, and aligned with the evolving needs of the e-commerce landscape.

Objectives

The Open Network for Digital Commerce has defined several key objectives that drive its efforts towards transforming the e-commerce ecosystem in India. These objectives include:

• Promoting inclusivity: The ONDC aims to create an inclusive digital marketplace that empowers businesses of all sizes, including micro, small, and medium enterprises (MSMEs), to thrive in the digital economy.

• Enhancing transparency: Transparency is a critical aspect of building trust in the e-commerce ecosystem. The ONDC seeks to establish transparent processes for transactions, pricing, and dispute resolution, fostering a fair and competitive environment for all stakeholders.

• Streamlining logistics: Efficient logistics management is essential for the success of e-commerce. The ONDC endeavors to streamline logistics operations, enabling the seamless movement of goods and reducing delivery timelines.

• Enabling interoperability: Interoperability is a key feature of the ONDC framework, allowing different technology platforms to seamlessly connect and exchange information. This interoperability fosters collaboration and innovation within the e-commerce ecosystem.

• Empowering consumers: The ONDC aims to empower consumers by providing them with a wider choice of products, transparent pricing, and a seamless shopping experience. By promoting consumer rights and protection, the ONDC ensures a trustworthy and secure environment for online transactions.

Structure

The Open Network for Digital Commerce comprises two main components: the Beck Protocol and the Industry Working Group.

Beckn Protocol

The Beckn Protocol serves as the foundation of the ONDC framework. It is a set of technical specifications and protocols that define the interactions between shoppers, technology platforms, and retailers. The protocol enables seamless communication, data exchange, and transaction processing, ensuring a standardized and interoperable e-commerce experience.

Industry Working Group

The Industry Working Group, formed under the auspices of the ONDC, brings together industry experts, technology providers, and policymakers to collaboratively shape the future of e-commerce. The working group focuses on addressing industry concerns, fostering innovation, and developing best practices for the adoption of the ONDC framework. By engaging stakeholders from various sectors, the working group ensures that the ONDC remains responsive to the evolving needs of the e-commerce ecosystem.

Concerns

While the Open Network for Digital Commerce holds immense potential, certain concerns need to be addressed. The Industry Working Group actively identifies and mitigates these concerns to create a robust and sustainable e-commerce ecosystem. Some of the key concerns include:

• Data security and privacy: With the increasing reliance on digital platforms, ensuring the security and privacy of consumer data is of paramount importance. The ONDC and the Industry Working Group work together to establish robust data protection measures and promote responsible data handling practices.

• Fair competition: The ONDC aims to create a level playing field for all participants in the e-commerce ecosystem. The Industry Working Group monitors and addresses any potential anti-competitive practices, ensuring fair competition and market access for businesses of all sizes.

• Regulatory compliance: The e-commerce landscape is subject to various regulations and policies. The Industry Working Group collaborates with policymakers to ensure that the ONDC framework aligns with existing regulations and promotes compliance among its participants.

Acceptance

The success of the Open Network for Digital Commerce relies on the acceptance and adoption of its specifications by various stakeholders. Let's explore some of the key stakeholders and their role in shaping the future of open e-commerce.

Buyer Apps

Buyer apps play a crucial role in the ONDC ecosystem. These apps enable consumers to discover products, compare prices, and make informed purchasing decisions. By leveraging the ONDC framework, buyer apps can provide a seamless and personalized shopping experience, enhancing customer satisfaction and loyalty.

Seller Apps

Seller apps empower businesses to showcase their products, manage inventory, and process orders efficiently. These apps leverage the ONDC framework to seamlessly connect with buyer apps, enabling smooth transactions and minimizing friction in the selling process. By embracing the ONDC, seller apps can expand their reach and tap into new customer segments.

Logistics

Efficient logistics management is fundamental to the success of e-commerce operations. The ONDC framework enables logistics providers to integrate their services seamlessly, ensuring timely and reliable delivery of products. By leveraging the ONDC, logistics companies can optimize their operations, reduce costs, and enhance customer satisfaction.

Conclusion

Through the Open Network for Digital Commerce, the Department for Promotion of Industry and Internal Trade (DPIIT) aims to revolutionize the e-commerce landscape in India. By fostering inclusivity, transparency, and interoperability, the ONDC framework has the potential to empower businesses, streamline operations, and enhance customer experiences. As the ONDC continues to evolve and gain acceptance, it holds the promise of shaping the future of open e-commerce in India and beyond.

Image Credits: Open Network for Digital Commerce